Press Association Sport understands the player, who made his senior England debut this season, could sign the contract by this weekend.

Sterling moved to Merseyside from QPR as a 15-year-old in February 2010 on a deal which still has 18 months to run.

But his rapid progress, which began with him being given his first-team debut in March by former manager Kenny Dalglish and continued under Brendan Rodgers - for whom he has become a regular starter - meant the club were keen to tie him down for longer.

There were some sticking points over wage demands, which alerted a host of top clubs, including Manchester City and Chelsea, but an agreement has been reached which satisfies all parties.

Liverpool were keen not to be held to ransom on the salary issue, wary of paying the youngster too much too soon, but it is believed Sterling's new contract will be incentivised and include a number of performance-related increments.